Sydney could once again be home to Australian submarines after new documents reveal the Department of Defence is considering housing at least part of the new fleet within the city's famous harbour.

A report obtained by South Australian Senator Rex Patrick through a freedom of information request suggests the Royal Australian Navy wants some of the new fleet of 12 submarines due in 2032 to be based in Sydney.

The options include Garden Island, HMAS Waterhen at Balls Head and Cockatoo Island.

According to Royal Australian Navy archives, a different site, HMAS Penguin at Balmoral in Sydney, had been used by the submarines of the Fourth Submarine Squadron after WWII but it was deemed unsuitable as a permanent establishment due to its "exposed position".

The site at Neutral Bay was chosen because availability of land close to an existing site, on a bay well protected from the weather made it "an ideal location for a naval establishment".